Is the Stock Market Invincible? (EP. 447) - Animal Spirits Recap

Podcast: Animal Spirits

Published: 2026-01-14

Duration: 1 hr 19 min

Summary

Michael Batnick and Ben Carlson navigate the current economic landscape, focusing on the resilience of the stock market, housing market challenges, and the rise of AI and sports gambling as economic forces.

What Happened

Michael Batnick and Ben Carlson open the discussion by examining the current state of the stock market, questioning its perceived invincibility. They highlight Wall Street analysts' projections for a stock rally in 2026, with an expected average gain of 9%, suggesting a bullish outlook for investors. Despite the optimism, they note the high credit card interest rates, which hover around 29%, and discuss the potential economic implications of capping these rates at 10%, which could dry up credit availability.

The hosts discuss the housing market, acknowledging the impact of institutional landlords, who own about 1% of home purchases in the U.S. They address concerns over Freddie Mac's serious delinquency rates for multifamily units, which have surpassed 2008 levels, indicating potential trouble ahead. They also explore the concept of home equity as a real asset, highlighting its role in financial strategies and the decreasing average monthly mortgage payments due to falling rates.

Carlson and Batnick turn their attention to the AI industry, noting the impressive valuations of companies like OpenAI, Anthropic, and XAI, each valued over $200 billion. An AI evaluation startup, LM Arena, was recently valued at $1.7 billion, underscoring the rapid growth and investor interest in the sector. This leads to a broader discussion on the implications of AI on the labor market and the economy as a whole.

The conversation shifts to the rise of sports gambling as a major economic force, evidenced by its rapid GDP growth rate of 7.6% between 2019 and 2024. Despite its growth, the hosts express concerns about its societal impacts, labeling it a negative sum activity. They also mention the notable decrease in the cost of TVs, attributing it to advancements in LED technology and mass production, which has seen prices fall by 90% since 2000.

Ben Carlson highlights the resilience of the U.S. economy despite challenges, supported by Jamie Dimon's comments on consumer spending and business health. The episode underscores the broadening out of the bull market, with international investment flows increasing, particularly in China and the ISHARES Emerging Market Index experiencing a significant return of 35% last year.

Finally, the hosts discuss the evolving restaurant industry, noting a decline in pizza establishments and a rise in Mexican, coffee, and bakery cuisines. They conclude with reflections on media trends, pointing out the secular decline in movie theater attendance, as demonstrated by the box office being $350 million below the previous year.

Key Insights